CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices hold support despite sweeping risk aversion
  • Monthly EIA report on supply trends, API inventory data due
  • Gold prices tethered as risk-off move brings conflicting forces

Crude oil prices didn’t find lasting traction as risk aversion roiled financial markets. The sentiment-linked WTI benchmark sank as US shares picked up on the negative lead from Europe but follow-through didn’t materialize, with prices swiftly rebounding to close the day little-changed.

Traders may have been leery of overextending on the downside following Friday’s brutal selloff until OPEC and its allies in a production cut scheme settle on a common message. Russia and Saudi Arabia have hinted at relaxing output curbs but other producers (like Ecuador) have voiced opposition to doing so.

Gold prices struggled to find direction as haven-seeking capital flows buoyed the US Dollar and Treasury bonds in tandem, weighing on yields. That put the yellow metal’s appeal as an anti-fiat alternative and its role as benchmark non-interest-bearing asset in conflict.

API INVENTORY DATA, MONTHLY EIA REPORT IN FOCUS

Looking ahead, crude oil volatility may be reanimated as API inventory flow data comes across the wires. The outcome will be judged against expectations of a slight 500k barrel outflow projected to appear in official DOE statistics published Thursday.

A monthly report on supply trends form the EIA is also due. That may show that swelling US output is already poised to undermine OPEC-led supply cut efforts as they are. Layering that on top of any Saudi- and Russia-led production increase might be seen as justifying an even lower oil price level, reviving selling pressure.

In the meantime, gold might remain anchored to familiar levels. An updated set of first-quarter US GDP figures and the Fed Beige Book survey of regional economic conditions are unlikely to materially alter the outlook on monetary policy. Meanwhile, stock futures are pointing to a pause in the risk-off drive.

See our quarterly crude oil price forecast to learn what will drive the trend through mid-year!

GOLD TECHNICAL ANALYSIS

Gold prices remain stuck between the outer layer of trend support set from December 2016, now at 1290.05, and a falling trend line guiding the move lower from mid-April (1302.13). A daily close below support exposes the 1260.80-66.44 area next. Alternatively, a reach of resistance at sees the next major inflection point at 1323.60, a former support level.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to consolidate at support in the 66.22-67.36 zone having reversed lower as expected. A daily close below it opens the door for a test of trend support set from June 2017, now in the 64.21-65.51 area. The first layer of significant resistance remains at 69.53, the April 19 high.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter